UPEN VIMALBHAI SHAH,AHMEDABAD V. THE INCOME TAX OFFICER,WARD-4(2)(5)(CURRENTLY INCOME TAX OFFICER,WARD-4(2)(3), AHMEDABAD

ITSSA 2/AHD/2024

AI Insights

The case involves Upen Vimalbhai Shah, the appellant, contesting an addition of Rs. 5,00,000 to his income for the Assessment Year 2011-12, which was alleged to be 'on-money' paid for a property transaction. The addition was initially made by the Assessing Officer based on seized documents from a related party's premises, suggesting that the appellant had paid unaccounted money for a property purchase. The Commissioner of Income Tax (Appeals) upheld this addition. However, the Tribunal found that the evidence was insufficient to conclusively prove that the appellant had made such a payment, leading to the allowance of the appellant's appeal and the deletion of the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 41008 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 25-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Other Referred Cases: Shri Mahendra B. Bagadai vs. DCIT, M/s. Riveria Properties Pvt. Ltd. vs. ITO, Jawaharbhai Atmaram Hathiwala Vs. ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATHVI RAJ MEENA
• Assessee Lawyers: CHIRAG SHAH
• Keywords: Set aside; Loose papers
• Section: 143(3); 250; 271(1)(c); 132

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T(SS).A. No.02/Ahd/2024 (Assessment Year: 2011-12) Upen Vimalbhai Shah, 202, Vamndan Flats, 74, Jain Nagar Society, Pladi, Ahmedabad-380007 Vs. Income Tax Officer, Ward-4(2)(5), (Currently ITO Ward4(2)(3)) Ahmedabad [PAN No.AFAPS2459A] (Appellant) .. (Respondent) Appellant by : Shri Chirag Shah, A.R. Respondent by: Shri Prathvi Raj Meena, CIT DR Date of Hearing 26.12.2024 Date of Pronouncement 25.03.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)-12, (in short “Ld. CIT(A)”), Ahmedabad vide order dated 14.12.2023 passed for A.Y. 2011-12. 2. The assessee has taken the following grounds of appeal:- “1. The assessment order passed u/s 143(3) of Income Tax Act by the Assessing Officer and confirmed by the first appellate authority u/s 250 is bad in law and deserved to be uncalled for. 2. The assessing officer as well as first appellate authority has erred in law and on facts in adding and confirming respectively the unexplained income of Rs. 5,00,000/-. The same deserves to be deleted. 3. The appellant craves to reserve his right to add, alter, amend, or delete any ground of appeal during the course of hearing.” IT(SS)A No. 02/Ahd/2024 Upen Vimalbhai Shah vs. ITO Asst.Year –2011-12 - 2– 3. The brief facts of the case are that the assessee filed original return of income on 09.09.2021 declaring total income of Rs. 2,52,570/-. Thereafter, the Assessing Officer received information that search under Section 132 of the Act was conducted at the residence of Shri Anil Hiralal Shah on 04.12.2014 from which certain excel sheets were seized. As per the excel sheet it was found that substantial amount of on-money was paid for various units sold in various real estate projects being developed by M/s. Sarthav Infrastructure Pvt. Ltd. The unaccounted on-money generated from sale of flats sold by M/s. Sarthav Infrastructure Pvt. Ltd. were deposited in the bank accounts of various family members and group concerns of “Sutariya Family”. From the analysis of the excel sheet, the Assessing Officer observed that assessee has paid a sum of Rs. 5,00,000/- for investment in Plot No. 259 in Abhishree Orchid Scheme of Sarthav Infrastructure Pvt. Ltd. and this amount of on-money was paid on 28.06.2010. Therefore, the Assessing Officer was of the view that assessee had paid a sum of Rs. 5,00,000/- on 28.06.2010 as on-money to M/s. Sarthav Infrastructure Pvt. Ltd. for the purpose of purchase of Plot No. 259 of M/s. Abhishree Orchid Scheme. Accordingly, the Assessing Officer made an addition of a sum of Rs. 5,00,000/- in the hands of the assessee towards on-money for purchase of flat with the following observations: “14.15 The evidence found during the course of search also correlate with the instant case. The assessee has purchased the Plot No,259 of Abhishree Orchid Scheme and paid the on-money of Rs.5,00,000/- during the F.Y. 2010-11 i.e. A.Y. 2011-12. Therefore, it is held that amount of cash of Rs,5,00,000/- paid for the Plot No. 259 developed by M/s. Sarthav Infrastructure Pvt. Ltd is nothing but undisclosed income of the assesses. Therefore the same is added to the total income of the assessee for the year under consideration. The penalty proceeding u/s. 271(1)(c) is initiated for concealment of income and furnishing of inaccurate particulars of Income.” IT(SS)A No. 02/Ahd/2024 Upen Vimalbhai Shah vs. ITO Asst.Year –2011-12 - 3– 4. In appeal, Ld. CIT(A) confirmed the additions in the hands of the assessee, with the following observations: “7.3 I have considered the issue and the written submission in support of this ground by the appellant. Fact that the appellant purchased the property Plot No 259 for construction of residence from SIPL is undisputed. Payments in cheque are shown to have been made between period 03/05/2009 to 20/12/2010. The only dispute is whether the appellant made any cash payment of Rs 5,00,000/- on 28/06/2010 or not to SIPL for the purchase of that property. It is seen that the document records the cheque as well as cash payments with respect to the transaction by the builder. The cheque receipts are authenticated by corresponding deposits in the Bank account. Thus during the same period of time cheque as well as the disputed cash deposit the cash receipts by SIPL recorded in CCCCC.xls was subsequently deposited in accounts of the members related to Sarthav group/ Sutariya family. The fact that ON MONEY was being received by the \"Sarthav Group\" has been admitted during the survey. In fact the AO of SIPL made additions regarding these cash deposits in the hands of the SIPL. The matter reached the second stage of appeal, where the Hon'ble ITAT Ahmedabad has dealt with the issue of cash receipt by SIPL in its various projects in its order dated 28/02/2023 in Appeal no. IT(ss) A Nos. 191/AHD/2018 and other appeals for AY 2009- 10 to 2015-16. The cash receipts by the appellant as ON MONEY were duly incorporated in the turnover of the appellant and profit was directed to be determined at a % of the same. Entries in CCCCC.xls were hence owned up as the recipient of the cheque and cash has accepted the amounts. The sheet belonged to SIPL and it is necessary to be authenticated by the appellant. It records the transactions made by the appellant and other persons in real state. The receipts were made within the period payments were made for purchase of the property which is not denied. The AO has not relied on any statement of any individual but on facts that emanate from the records. Tax proceedings are based on principle of preponderance of probability. Therefore, I confirm the addition made by the AO of Rs 5,00,000/- in the hands of the appellant as undisclosed income. Ground of appeal 2 is dismissed.” 5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A). 6. Before us, the Counsel for the assessee submitted that evidently, there is no correlation between date of on-money as mentioned in table reproduced at Page 2 of the assessment order, as compared to table reproduced at Page 5 of the assessment order, wherein it has been mentioned that assessee had paid on-money amounting to Rs. 5,00,000/- on 28.06.2010. Therefore, clearly the IT(SS)A No. 02/Ahd/2024 Upen Vimalbhai Shah vs. ITO Asst.Year –2011-12 - 4– date mentioned at Page 5 of the assessment order being 28.06.2010 is incorrect and cannot be relied upon. Secondly, the Counsel for the assessee drew our attention to Para 14.8 of the assessment order, wherein the Assessing Officer has himself observed that in the statement recorded of Shri Sanjay Sutariya, it is found that he has not given a categorical reply to the question asked during the statement. However, the evidences found in excel sheet indicates that the same relates to the assessee. Accordingly, the Counsel for the assessee submitted that it is evident from Para 14.8 of the assessment order that from the statement of the Director of M/s. Sarthav Infrastructure Pvt. Ltd., he has not given a categorical statement regarding receipt of on- money and has evaded this question and therefore, there is no basis whatsoever for making addition on the basis of an unsigned excel sheet found at third party premises. It was submitted that since there is no mention of name of assessee by the Director of the company itself selling the flats and therefore, there is no basis of making the addition in the hands of the assessee. Thirdly, the Counsel for the assessee submitted that the booking of Plot No. 259 in the project Abhishree Orchid was cancelled by the assessee vide Cancellation Deed dated 20.08.2014 and M/s. Sarthav Infrastructure Pvt. Ltd. returned the booking amount of Rs. 15,13,300/- through banking channels to the assessee. The Counsel for the assessee submitted that the above facts also corroborates that there is no on-money paid by the assessee towards purchase of Plot No. 259 in Abhishree Orchid Scheme of Sarthav Infrastructure Pvt. Ltd. 7. In response, Ld. D.R. placed reliance on the observations made by the Assessing Officer and Ld. CIT(A), in their respective order. IT(SS)A No. 02/Ahd/2024 Upen Vimalbhai Shah vs. ITO Asst.Year –2011-12 - 5– 8. We have heard the rival contentions and perused the material on record. 9. On going through the facts of the instant case, we are of the considered view that in the instant case, the additions made by the Assessing Officer are not liable to be sustained in the hands of the assessee. We observe that the entire basis of making additions in the hands of the assessee is on the basis of an unsigned excel sheet found during the course of search conducted at the premises of Shri Anil Hiralal Shah, from which a certain excel sheet was found. However, apart from this excel sheet there is no corroborative evidence to establish that assessee had paid on-money in respect of purchase of the aforesaid Plot No. 259 at Abhishree Orchid. Even from the statement recorded of the Director of Sarthav Infrastructure Pvt. Ltd., the Assessing Officer itself has observed that he has not given a categorical reply to the question asked and has evaded the question put forth before him. Therefore, the additions were made only on the basis of excel sheet found during the course of search proceedings. Further, we also observe that the booking of the flat itself has been cancelled and the money paid by the assessee towards the booking of Plot No. 259 at Abhishree Orchid was refunded / returned to the assessee, through banking channels. It would be also useful to reproduce the relevant extract of the decision of Ahmedabad Tribunal in the case of Shri Mahendra B. Bagadai vs. DCIT in ITA No. 1133/Ahd/2009 for A.Y. 2005-06, wherein the Tribunal made the following observations: “8. We have considered the rival submission and materials available on record. During the course of hearing of the appeal, assessee was directed to file copies of the sale deeds in question which have been filed on record which show the date of documents 10-04- 2008 and the total sale consideration paid for purchase of property by the assessee is mentioned at Rs.60,40,297/-. IT(SS)A No. 02/Ahd/2024 Upen Vimalbhai Shah vs. ITO Asst.Year –2011-12 - 6– Similarly, the learned D R was directed to intimate about proceedings against the person in whose case search was conducted and if any statements of comparable cases have been recorded. Learned D R filed copy of the assessment order in the case of firm M/s. Dev Enterprises u/s 143 (3) of the IT Act dated 29-12-2006 in which Shri Deepak Thakkar was the partner in whose case search was conducted. Learned D R submitted that no addition is made on account of loose annexure A-10 and A-11, but the said firm made disclosure of Rs.74,44,290/- in the return filed on 30-06-2006. In the case of the firm further addition of Rs.5,51,000/- is made. The learned D R admitted that no statement of the builder has been relied upon by the A O and that he has not received any copy of their statement if any. As regards the statement, if any recorded in the case of comparable cases, learned D R filed copy of the letter dated 16-08-2010 (supra) in which it is nowhere mentioned if statements in the cases of comparable cases have been recorded by the revenue department. Considering the facts of the case in the light of the submissions of the parties, we may note that the A O in the assessment order in the case of firm M/s. Dev Enterprises in which Shri Deepak Thakkar and Shri Sanjay Thakkar are partners have considered seized paper A-10 and A-11 regarding payment of on money but finally made the addition of Rs.5,51,000/- only after satisfying from the reconciliation statement. No similar addition has been made as has been made in the case of the assessee. It may also be noted that in the case of the firm despite recovery of the loose papers, they have denied their hand-writing in the seized papers and have not accepted receipt of any on money from the assessee. It, therefore, follows that recipient and payee both have denied receipt and payment of alleged “on money” in cash. The above facts noted in the assessment order in the case of the firm M/s. Dev Enterprises prove that the authorities below were not justified in making the huge addition against the assessee. As per the seized papers the amount of sale consideration through cheques paid is Rs.51 lacs, but according to the MOU and sale deeds filed on record the total consideration of Rs.60,40,297/- have been settled and paid by the assessee company and not by Trident (India) whose name is mentioned in the seized papers. It contradicts and creates doubt in the authenticity of the seized papers. It is undisputed fact that the MOU was signed by the seller on 05-05-2004 which clearly mentions the sale of all the properties at Rs.60.40 lacs, therefore, on the same day there is no question of making cash payment of Rs.20 lacs as per the writings mentioned in the seized papers in cash column. Further, when the assessee company have duly signed enforceable MOU, stating therein that the seller shall have to sell the property at Rs.60.40 lacs, there is no question of making subsequent payments in cash on various dates as mentioned in the loose papers. The above details contained in loose – seized papers are against human probability. It may also be noted here that since no search was conducted in the case of the assessee and no evidence was found during the course of survey against the assessee, therefore, the presumptions u/s 132 (4A) and section 292 C could not be drawn against the assessee. The findings of the A O would show that A O has assumed certain facts which are not on record of the A O or that the same are not supported by any material on record. A O has not brought sufficient and cogent material/evidence against the assessee to prove that assessee made payment of “on money” in cash over and above the consideration shown in the MOU and sale deeds. No statement of any person has been recorded in whose case loose papers were recovered to explain the entries contained therein. Learned D R admitted that A O has not relied upon any statement of the builder against the assessee and that no such copy has been received by him. Similarly, no statement in the comparable IT(SS)A No. 02/Ahd/2024 Upen Vimalbhai Shah vs. ITO Asst.Year –2011-12 - 7– cases has been produced before us. It would prove that even in the comparable cases no statement is recorded against the interest of the assessee. The surrender made in 4 comparable cases has not been confronted to the assessee. Learned Counsel for the assessee filed copy of the note attached with the return of income in the case of Shri T. K. Tekwani in which it was mentioned that he has surrendered the amount to buy peace to avoid litigation. Such a statement cannot be said to be incriminating in nature against the interest of the assessee. How admission in comparable cases for payment of “on money” in their cases is admissible against the assessee is not known in law because they have never admitted that assessee paid any “on money” in cash. The rates of assessee as compared with others at ground floor have not been disputed. Rates of the assessee are higher at first floor. A O in the remand report (Para 4 of remand report noted at page 18 of this order) admitted that he has not verified the rates, therefore, no adverse inference can be drawn against the assessee. The above facts prove that there is no evidence on record that the seized paper is connected with the assessee or that assessee has in fact made the cash payment to the builders over and above the amount mentioned in the documents. No evidence of actual payment of cash was found. No evidence of excess amount paid was found. No hand-writing of the assessee’s director or connected person was found on the seized papers. The director of the assessee company never admitted payment of on money in cash in his statement. Since, assessee is a purchaser, therefore, section 50 C of the IT Act would also not apply in its case as is held in the case of ITO Vs Venu Proteins Industries reported in 4 ITR (Tribunal) 602 (Ahmedabad). It may also be noted here that in the seized papers the names of “Shri Jatin Parikh/ Trident (India)” is mentioned but the name of the assessee is M/s. Trident Creations Pvt. Ltd., which is not mentioned in the seized papers would prove that the seized papers do not belong to the assessee. There is also no mention in the loose papers if any cash payment is made by the assessee company to the builders. The builders/sellers from whose possession seized papers have been recovered have not made any statement against the assessee, therefore, the entries or notings contained in the loose papers found from the possession of the builders are not sufficient to make the addition against the assessee. There is no other corroborative material or independent evidence available on record against the assessee. The submissions of the learned D R are based upon assumption only that since 4 parties made payment of “on money” to the builder, therefore, there is a presumption against the assessee that assessee also paid “on money” in cash . But, equally other buyers have not paid any “on money” to the builders. Since the seized papers are not in the name of the assessee and is also having different amount of cheque as against the sale consideration shown in the MOU and the sale deeds, therefore, the principle of preponderance of probability would also not apply against the assessee. Since, the AO wanted to tax the alleged payment of “on money” in the case of the assessee; therefore, burden was upon the A O to prove that assessee made payment of “on money” from undisclosed sources, which has not been discharged in this case. Considering the facts and circumstances of the case, we are of the view that the A O has not brought sufficient material against the assessee to make the above addition. The A O made addition merely on suspicion and assumption of facts, which cannot take place of legal proof. It is thus a case of no evidence for making the addition. We are, therefore, of the view that the authorities below were not justified in making the addition against the assessee. We accordingly, set aside the orders of the authorities below and delete the entire addition.” IT(SS)A No. 02/Ahd/2024 Upen Vimalbhai Shah vs. ITO Asst.Year –2011-12 - 8– 7. In view of the above by following the order of the Tribunal, we set aside the orders of the authorities below and delete the addition.” 10. In the case of M/s. Riveria Properties Pvt. Ltd. vs. ITO in ITA No. 250/Mum/2013 & 2748/Mum/2016 for A.Y. 2006-07 the Mumbai Tribunal made the following observations: “11. The ITAT, Ahmedabad ‘C’ Bench in the case of Jawaharbhai Atmaram Hathiwala Vs. ITO reported in (2010) 128 TTJ 36, has considered similar issue. The coordinate bench, under similar set of facts, decided the issue in favour of the assessee as under: “The assessee has claimed to have made payment of Rs.1,01,687/- only upto 31st March, 1999 and has consistently taken the stand that it has not paid balance amount of Rs.3,81,414/- as stated in the seized document. No evidence could be brought on record by the Revenue to show that in fact the assessee had paid the amount of Rs.3,81,414/- to OD. No document containing signature of the assessee or handwriting of the assessee to corroborate the above making of payment by the assessee was found during the course of the search. Even at time of cross examination by the assessee the partner of OD could not produce any evidence that the amount written in the seized document was in fact received from the assessee. As the assessee has categorically denied to have made any payment in excess of Rs.1,01,687/- upto 31st March, 1999 in respect of purchase of flat the said denial cannot be brushed aside without bringing any positive material on record. Merely recording made by a third party or statement of a third party cannot be treated as so sacrosanct so as to read as a positive material against the assessee. In view of the above the CIT(A) was not justified in confirming addition to the extent of Rs.3,81,414/- in the hands of the assessee. Therefore the addition of Rs.3,81,414/- is deleted. Asst. CIT Vs. Prabhat Oil Mills (1995) 52 TTJ (Ahd) 533 relied on; K.P. Varghese Vs. ITO (1981) 24 CTR (SC) 358: (1981) 131 ITR 597 (SC) applied.” …. 14. Considering the total facts and circumstances of the case and also applying the ratios of the judgements cited above, we are of the view that the A.O. is not correct in coming to the conclusion that on money is exchanged between the parties based on a loose sheet found in the premises of a third person. To sustain the addition, the A.O. should have conducted an independent enquiry about the value of the property and ascertain whether any under valuation is done, if so what is the correct value of the property. Further, the A.O. did not brought on record any evidence to support his contention to say that there is on-money exchanged between the parties. In the absence of proper enquiry and sufficient evidences, we find no reason to confirm addition made by the A.O towards on money. Therefore, we direct the Assessing Officer to delete addition of Rs. 3,05,00,000/- made towards on money.” IT(SS)A No. 02/Ahd/2024 Upen Vimalbhai Shah vs. ITO Asst.Year –2011-12 - 9– 11. Accordingly, in light of the judicial precedents reproduced above and in light of the assessee’s set of facts, we are of the considered view that the addition made in the hands of the assessee is liable to be deleted. 12. In the result, the appeal of the assessee is allowed. This Order is pronounced in the Open Court on 25/03/2025 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 25/03/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 11.03.2025 2. Date on which the typed draft is placed before the Dictating Member 12.03.2025 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 13.03.2025 5. Date on which the fair order is placed before the Dictating Member for pronouncement 25.03.2025 6. Date on which the fair order comes back to the Sr.P.S./P.S 25.03.2025 7. Date on which the file goes to the Bench Clerk 25.03.2025 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order…………………………………… "